A lot more of gambling comes down to mathematics than you might think. It was, after all, due to gambling that the entire theory of probability came about. It’s one of the greatest practical areas for the theory of mathematics, and understanding the terms properly will help you play better and win more.
Probability is the likelihood that a specific event will happen. It’s always assigned a numerical value of between 0 and 1, 0 meaning that an event will never happen and 1 meaning it will always happen. It’s possible to calculate the probability of single and multiple events. It can be expressed as a fraction such as 1/2, a percentage such as 50%, a decimal such as 0.5, or odds such as 1:1.
This is literally derived from the expression Per Cent, meaning per 100. Percentage is a ratio expressed as number per 100. If a game has a Return to Player percentage of 95, for example, it means that for every 100 coins you bet you can expect to get 95 back over time.
As previously mentioned, Odds are a way of describing an event’s probability, but there is a little more to them than that; they’re also used to describe a bet’s payoff. If you compare the likelihood of an event occurring with the payoff if it does, you can make quick decisions about whether to place a bet or not.
For example, if you roll a die there are 6 different sides it could show facing up. If you bet on this there is 1 situation in which you will be right and 5 in which you will be wrong, so the odds of you winning are 5:1. If you place this bet and keep rolling the dice in sets of 6 rolls, over time you should get an average payout of for 1 in 6 rolls.
If the bet is set at 7:1 for the same event, you’ll get paid out more for the same probability. At 4:1 you’ll get less.
The Expected value is what a bet is worth when repeated over a long time. If it’s positive, the bet will be profitable; if it’s negative you’re likely to see a loss. In the short term, of course, anything can happen.
The house edge refers to the expected loss per casino game for you. It is usually expressed as a percentage, and is the opposite of the Return to Player figure mentioned above. If the RTP is 95%, the House Edge is 5%.
Average Hourly Cost
To help manage your bankroll and your time it can be helpful to look at what the cost of playing a game per hour, or its Average Hourly Cost. Casinos use this information too, when deciding which games to focus on.
To calculate the Average Hourly Cost, you need to look at your average bet size, the number of bets per hour and the House Edge. Multiply them all together and decide if the figure is worth your time!
Advantage Gambling is any gambling activity where you have information that creates a positive Expected Value. In other words, you only bet when you have an Edge.
The Edge that you have in Advantage Gambling can be due to card counting in Blackjack, Video Poker combined with Slots promotions or insider information on any type of sportsbetting. There are plenty of other examples too, but the constant among all of them is that they are legitimate techniques, rather than cheats. Marking the cards for Blackjack, for example, would not be Advantage Gambling.
Variance or Standard Deviation
When results don’t conform to what we expect statistically, this is known as Variance. The amount that they don’t conform by is measured in units of Standard Deviation. Anything can happen in the short term, but in the long-term you want low variance with small Standard Deviations so that you can better understand the mechanics of a game.
The Vigorish, or Vig, is the commission that bookmakers take. For example, if you need to risk $110 to win $100, the Vigorish is $10. You might also hear the House Edge referred to, somewhat imprecisely, as the Vig. To profit from sportsbetting you need to find a way to win often enough that the Vigorish is compensated for.
Practice Makes Perfect
The only way to really understand the mathematical concepts used in gambling is, in fact, to gamble! The more time you spend practically applying this theoretical mathematical knowledge, the easier it will be to grasp it and take it on board. Don’t be too surprised if you start to notice it helping you manage other areas of your life, such as your monthly budget, better too!